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China Stocks gain on US-China tade war ceasefire deal

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Headline indices of the Mainland equity market advanced on Monday, 03 December 2018, on relief rally, after the and on the weekend temporary suspended new tariffs and agreed to try reaching a trade deal within 90 days. In late afternoon trades, the benchmark Shanghai Composite Index added 2.7%, or 69.60 points, to 2,657.79, meanwhile the Shenzhen Composite Index, which tracks stocks on China's second exchange, added 3.4%, or 45.54 points, to 1,383.28. The blue-chip CSI300 index rose 2.9%, or 91.75 points, to 3,264.44.

The Mainland market took heart from the positive Sino-US trade truce struck at the Summit. In a much-anticipated meeting between and at the weekend, the heads of the world's two biggest economies hammered out a deal that will see them hold off on their tit-for-tat tariffs row, which has roiled global equities for most of the year. The leaders called a cease-fire in their trade dispute, to last for at least 90 days, to allow time to smooth out disagreements over Chinese that the U. S. and other trading partners consider predatory. Trump will hold off on plans to raise tariffs on $200 billion in Chinese goods, which were supposed to kick in on Jan. 1. In return, Xi agreed to buy a "very substantial amount" of agricultural, and from the U. S. to reduce its large trade deficit with

The also said the countries would hold additional talks, with an existing 10% tariffs on $200 billion worth of Chinese goods to be lifted to 25% if no deal was reached within 90 days.

The moves came following a new reading on economic activity in China, the Caixin Manufacturing Purchasing Managers' Index, which showed factory activity grew slightly in November compared to the previous month. The Caixin/Purchasing Managers' Index for November rose to 50.2 from 50.1 in October.

Economists polled by had forecast a reading of 50.0, the level that separates expansion from contraction.

CURRENCY NEWS: China yuan weakened against greenback on Monday, after central softer mid-point rate, after a closely watched meeting between Chinese and U. S. leaders produced a ceasefire in their countries' bruising trade conflict. The deal agreed to in by China and the halts additional tariffs that were due to take effect on Jan. 1 and was lauded by both sides. Prior to market opening, the set central parity rate at 6.9431 per US dollar, weaker by 74 basis points from previous day mid-point rate. In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2% from the central parity rate each trading day.

CRUDE OIL NEWS: Crude saw strong gains on Monday Asian trading hours. The international benchmark Brent surged 5% to $62.40 per barrel. U. S. crude futures leaped 5.3% to $53.64 per barrel. The moves in the markets came after crude saw its worst month in a decade during November, amid concerns of oversupply and global politics. Intermediate, or U. S. crude, lost 21% in November, tumbling to its lowest level in a year and logging its worst performance since October 2008.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, December 03 2018. 11:25 IST